Southeast Asia could gain as supply chains shift during the pandemic, Singapore minister says

SINGAPORE — The Covid-19 pandemic has changed the way companies deploy their employees and how they organize their supply chains — and that could create opportunities for Southeast Asia, says Singapore’s trade and industry minister.

As the pandemic hit, workers have moved to work remotely from home, and several companies have announced policies to allow employees to continue doing so until next year, or even permanently.

“Since the coronavirus outbreak, we have seen that it will bring about fundamental changes in the way people work and organize their supply chains. For example, this work-from-home phenomenon – many companies are reorganizing the way their global footprint of where they put their people and where they put their production chains, and how they organize their supply chains,” Singapore’s Chan Chun Sing told CNBC’s “Squawk Box Asia” on Thursday.

“And that will cause a reshuffling of global production and supply chains,” he added.

He added that those changes will have some implications for Southeast Asia, when companies think about how to strengthen the resilience of their supply chains.

“If some of them diversify to Southeast Asia, there will be more opportunities for the Southeast Asian economies, including Singapore,” Chan said.

With regard to Singapore’s exports, which came in much worse than expected in October, Chan pointed out that not all sectors are recovering at the same pace. He added that sectors like oil and gas, marine offshore, and tourism, are still down.

“But we are confident that so long as … most of the Asian countries are able to keep their infection numbers down, Asia will be a possible engine of growth going forward,” he said.

While Pfizer and Moderna have announced positive trial data on the effectiveness of their vaccines, the race is also on for several companies globally to develop their own vaccines.

Chan said the city-state’s strict intellectual property protection regulations are the “most critical” factor for such companies.

“And increasingly … I would say (this is) the most critical consideration as to where people put such knowledge-intensive industries in. So this includes the bio-pharma sector … ICT sector,” he said, referring to the Information and communications technology industry.

Apart from that, Singapore is making sure it’s staying “open” without export restrictions even during the pandemic.

“That makes us extremely attractive for people to base their production and distribution chains out of Singapore,” Chan said. “While other countries might try to attract some bio-pharma companies … based on the size of their domestic market, we attract companies here based on the size of the global and regional market.”

Chan said the coronavirus situation in Singapore has currently stabilized, and people are not feeling like they need to rush to take a vaccine when it becomes available in the country.

Asked if the Singapore public is open to taking a vaccine, or whether people perceive the vaccine with a degree of caution, he said: “At this point in time, when I talk to … the general public in Singapore, there’s no great urgency for people to want to rush to take the vaccine.”

“Partly because the situation in Singapore has stabilized, and people know that actually there’s no need to rush to do this,” he said.

The number of new locally transmitted cases in the country has fallen to zero for the past several days, although there are still a few imported cases.

“We will take our time to make the assessment to make sure that any vaccine that is available in Singapore is safe for our public use,” Chan concluded.